Until the day you discover that your funds aren’t actually invested, but gone.
This has happened to a number of people, famous and not so famous. The Bernie Madoff Ponzi scheme was worth $50 billion, and even snared several celebrities. Kevin Bacon, Kyra Sedgewick, Larry King, and Zsa Zsa Gabor were just a few of his well-known victims. Overall, there were more than 8,000 possible victims of the scheme.
Madoff is just one of many brokers who take advantage of their clients, known or unknown. But there are so many other dishonest brokers and investment advisors that you may never hear about.
How Stockbrokers Can Steal Your Money
Stockbrokers are paid commissions on the sales and transactions they generate. Some are tempted to increase their commissions using several tactics that may go unnoticed at first. In many cases, the broker sends out falsified “account statements” that show a different version of the actual state of the account.
Our attorneys have seen a rise in cases involving financial advisors who steal, borrow or loan money from clients. No matter how the broker describes the relationship, FINRA and most brokerage firms prohibit brokers from taking client money for their own benefit. Stockbrokers have unique insight into customer financial situation and are in a position of trust to exploit this relationship. If your financial advisor has taken money from you without re-paying it, you may be able to recover your losses.
One form of excessive trading is called “churning,” is where a broker trades more often than necessary to generate additional commissions. Unfortunately, this works in favor of the broker, and isn’t in the best interest of the client’s investment goals.
Other ways a stockbroker can deceive include:
- Misrepresentation
- Unauthorized trading
- Unauthorized changes in a client’s risk profile
- Failing to advise clients of risky investments
- Purchase securities and investments that are unsuitable
- Investing in variable annuities and/or variable universal life policies
- Negligent or risky Retirement Planning
Brokers also provide advice to their clients on what stocks to purchase and which to avoid. This can cause problems if a broker encourages his or her clients to purchase investments that may be unsuitable or misrepresents any potential risks, especially with funds intended for retirement, such as so-called “alternative investments.” Any retirement funds should be invested in stocks and other investments with low risk, especially if they are intended for a client’s later living expenses.
Recover Your Money Through FINRA Arbitration
This agency, formally known as the Financial Industry Regulatory Authority, Inc., is a private, self-regulated organization for the industry. Its predecessor was the National Association of Securities Dealers, Inc. (NASD). FINRA is the largest independent regulator for all securities firms that conduct business in the US, and is also the licensing agent. This means that FINRA broker dealers must comply with federal and state securities laws as well as securities regulations.
FINRA also offers a free online tool called BrokerCheck that allows you to investigate a broker or investment advisor’s record, and find out if he or she has been subjected to any disciplinary action. You’ll be able to see in one complete record where they’ve worked, if they have had any complaints filed against them, or if they are still actively registered.
The Securities And Exchange Commission is the government agency that regulates the financial services industry, including stockbrokers. The SEC offers a similar online checking tool at Investor.gov.
Both agencies work to ensure compliance and protect investors. When financial and investment firms violate regulations or laws, they can face sanctions and other actions by SEC or FINRA regulators, as well as federal or state criminal prosecutors.
Should you suspect that a stockbroker may have committed a form of misconduct, you can contact one or both agencies and file a complaint.
Additionally, hiring an attorney who handles these kinds of complaints can help guide you through the process.
Get Help From Silver Law Group
Attorney Scott Silver has worked with hundreds of clients who have lost money through stockbroker misconduct and securities/investment fraud. Our attorneys are admitted to practice in both New York and Florida. We represent investors nationwide and work to help recover these losses from brokerage firms or investment advisors. We’ve represented hundreds of investors in broker dispute cases against both small and large brokerages and investment firms.
Most cases are handled on a contingency fee basis, based on the monies we recover for you. You won’t owe us a fee until we recover.
If you’re not sure about your accounts, or have any questions about how they are handled, contact Silver Law Firm today and speak with an experienced securities attorney.